Oil Drops Over a Percent After OPEC+ Price Increase, Demand and Supply Pressure
2022.06.03 11:30
by Daniel Shvartsman
Investing.com — Crude oil prices dropped in early Friday trading in the wake of OPEC+’s announcement to increase production and a myriad of crosswinds in the volatile, supply-constrained market.
At 04:00 am ET (0800 GMT), West Texas Intermediate crude oil traded at $115.34 a barrel, down 1.15% on the day, while Brent Crude oil traded down 1.05% at $116.56/barrel.
Yesterday, OPEC+ announced it would increase production in July and August by 50% from its prior plan, to 0.648 million barrels/day. The reception to the news has been muted, as the European embargo on Russian oil, a draw on U.S. oil inventories, and the re-opening of Shanghai after a COVID lockdown marked signs of constrained supply vs. rising demand.
No doubt with the persistently higher oil prices and their effect on gasoline prices and inflation more broadly in mind, U.S. President Joe Biden is said to be planning to visit Saudi Arabia in an effort to ‘rebuild relations’ after tensions related to the killing of journalist Jamal Khashoggi.
At 01:00 pm ET (1700 GMT), the Baker Hughes oil rig and total rig reports come out, giving a weekly indicator on U.S. shale drilling and its rise amidst the sustained higher energy prices. That said, levels as of last week remain below pre-pandemic levels, which may be a sign of investor-imposed discipline in the oil patch or reluctance to believe that oil prices will stick, or both.
